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2 Cannabis Stocks Becoming Popular Short-Seller Targets

FIS Astec Analytics’ latest batch of short seller data revealed a pair of popular marijuana stocks are among the hottest stocks to short these days.

The Most Popular

According to FIS Astec, Tilray Inc (NASDAQ: TLRY) is the most popular stock among short sellers after gaining 299 percent in the past three months ahead of Canadian cannabis legalization last week.

FIS Astec says short interest volume dropped 11 percent last week, suggesting short sellers may be closing out some of their positions. However, the utilization rate for Tilray stock dropped by only 3 percent to 88 percent, indicating institutional buyers may also be exiting the stock after its huge run. The elevated 88 percent utilization rate is also a sign there’s still a massive number of short sellers expecting the stock’s recent correction to continue.

The Wildcard

Back in September, New Age Beverages Corp (NASDAQ: NBEV) announced it would begin testing cannabidiol-infused functional beverages in Colorado, and within weeks the stock had been swept up in the marijuana buying frenzy, tripling in share price in a matter of days.

Enter the short sellers, who have been piling into New Age Beverages for the past three weeks. FIS Astec said short sellers quadrupled their position in the stock in the first week of September and have since pushed the stock’s utilization rate to 100 percent.

“Short sellers are positioning themselves in advance of any burst in the cannabidiol bubble, which may bring New Age shares crashing back to earth,” FIS Astec wrote.

After a huge pop in marijuana stocks in August and September, short sellers have been on the winning trade in October. Since the end of September, New Age Beverage and Tilray shares are down 2.4 percent and 15.9 percent, respectively.